Economy & Budget

House Republicans Unveil Free-Market Solution For Big Three

The U.S. House GOP leadership Wednesday unveiled their own “no bailout alternative” to counter the Democrat’s proposed bailout of the United Auto Workers (UAW) union and the Big Three automakers. Represented by Minority Leader John Boehner (R-Ohio), Minority Whip Eric Cantor (R-Va) and Rep. Mike Pence (R-Ind.), the newly-elected Chairman of the Republican Conference, Republicans offered for consideration the American Automotive Reorganization and Recovery Plan, a free-market solution to counter the immediate $15 billion taxpayer-funded bailout proposed by the Democrat leadership in Congress.

In a written statement, Boehner voiced concerns with the Democrat bailout plan.

“The proposal put forth by our colleagues in the Democratic majority is unworthy of American auto workers and unworthy of American taxpayers. It guarantees failure at taxpayer expense. It will keep the industry dependent on taxpayer money instead of giving auto workers the security of a viable industry that is back on its feet and ready to compete. American auto workers and taxpayers deserve better,” Boehner said. “A responsible plan should protect taxpayers and help auto workers and their families by allowing the Big Three to become competitive again. Our plan does this,” he added.

Democrats grudgingly concede that their $15 billion quick fix will be the first of what will likely become many infusions of taxpayer cash that would be needed to keep the U.S. auto industry afloat under their plan. The Democrats mandate a continuation of the failed policies of overpriced UAW union factories and place undue burdens on automakers with more government regulations. Democrats would require that the auto companies cease and desist state-level lawsuits fighting impracticable mandated fuel efficiency standards for new cars. Democrats would also require the appointment of a federal “car czar” to oversee the auto industry.

Pence spoke about this proposed federal “czar” in a statement yesterday.

“The Democrat bailout also seeks to create a ‘car czar’ with the responsibility of making the car companies profitable again,” Pence said. “Trusting a Washington bureaucrat, who probably never tightened a lugnut, with fixing what ails the American automotive industry is not the answer.”

Democrats are desperate to place a Republican label on this bailout, and the outgoing Bush administration appears to be the only GOP-led entity willing to oblige by signing on to more massive handouts of taxpayer money with an unrealistic band-aid mentality and with no enforced accountability measures.

In this new alternative plan, House Republicans would require automakers to achieve their own restructuring plans submitted last week to Congress in a matter of mere weeks, not the months or years vaguely required by Democrats. The GOP plan sets hard benchmarks before the automakers can receive short-term insurance for private-sector loans that would infuse the Big Three with needed cash instead of putting the taxpayer at risk with government-funded loans or loan guarantees.

The GOP plan would also require the UAW union to make some concessions including the elimination of Supplemental Unemployment Benefits; elimination of the highly controversial Job Banks Program; agreeing to reduce company retiree health care obligations or otherwise convert a portion of such obligations in to equity; and agreeing to reduce benefits and wages to the level paid by non-Big Three manufacturers.

The Job Banks Program requires that union workers are indefinitely — that’s right, indefinitely — paid most of their wages if they are laid off. The UAW union has offered to “suspend” the program for the time being. These and other elements in the union contracts are crippling the Big Three, rendering these U.S. automakers incapable of competing with lower labor costs afforded foreign companies manufacturing automobiles in the United States.

The Republican plan is the best yet offered to circumvent the pending catastrophic nationalization of the auto industry. The plan would offer automakers a fighting chance to get themselves back in the competition.


Sign Up